Tuesday, 14 February 2017

Yesterday, on Monday the 13th
of February, Steven Mnuchin was confirmed
as Treasury Secretary within President Trump’s administration. Whilst the
media have been quick to highlight previous unsavoury business practices implemented
by Mnuchin, this post will look at the broader picture and, potentially, the
confirmation’s effect upon the forthcoming future of American (and therefore
global) financial regulation.

During the lead-up to the Financial
Crisis, the composition of the top economic-related jobs in President George W.
Bush’s administration earned it the name ‘Government
Sachs’ – this due to the presence of Stephen Friedman, Joshua Bolten,
Robert Steel, William Dudley, and the most of famous of appointees, Henry ‘Hank’
Paulson. Yet, the connection between government and Goldman Sachs stretches much
farther back than the turn of the millennium, allegedly going as far back
as the Roosevelt administration with the appointment of Goldman Chief Executive
Sidney J Weinberg to serve as the assistant director of the War Production
Board. The link between the two stretches through many administrations since,
perhaps peaking with the infiltration of Robert Rubin and his
deregulation-inspired revolution that arguably stands as the root to today’s
chaotic economy. Whilst it pays to look at the individual appointments of
Presidents, it is worth looking at the bigger picture, and this connection
between Government and Goldman Sachs, continues today. Following on from his
Father, who was a partner
in the firm, Steven Mnuchin was an Executive Vice-President and Co-Chief
Information Officer at Goldman Sachs in a career spanning nearly 17 years with
the preeminent banking giant. The appointment of Mnuchin consolidates a
tripartite-of-influence that will
affect the direction of the Trump Administration, particularly in relation to
the most crucial element, that of the newly-created ‘White House Chief
Strategist’ Steve Bannon. Bannon, who worked for Goldman during the
highly-charged years of the 1980s, is becoming a central figure in the Trump
Administration, with some suggesting that he was the driving force behind the
recent ‘Muslim
Ban’, which has caused great concern and debate across the world – Time magazine
ran with Bannon on the cover, accompanied by the title of ‘the great manipulator’.
The final component of the threesome, Gary Cohn, former president of Goldman, has joined
the Trump administration as director of the National Economic Council and
an assistant to the President for economic policy – all of the economic-related
posts and positions of influence can trace their roots back to Goldman.

So, despite Donald Trump’s attacks
on his opponents during the campaign trail, and his accusations that Goldman
had ‘robbed
our working class’, he has nonetheless continued a tradition that sees
Goldman affiliates positioned within key
elements of, perhaps, the most influential administration in the world. This is
worrying yes, but for what reason? Is it worrying because this bank now has
affiliates in almost every economically-key section of Government – perhaps,
but this is nothing new. It is arguably more worrying that an administration
that is seemingly insistent upon introducing divisive policies within society,
and sweeping deregulatory reforms economically, only 9-years after the recent
crisis, is so closely aligned to a company that can stand to make substantial profits at the expense of
society, and has unquestionably demonstrated time and time again that it is willing to do so. The
politics of the Trump Administration, in terms of its affect upon a number of different
aspects of society, can be debated endlessly. For this post though, it is
crucial that the narrative of the danger of deregulation so close to the last
financial crisis is promoted and disseminated as loudly and widely as possible –
the cost of experiencing another financial attack by financial elites may be too
great to bear.

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Contributions are welcome to this blog. If you would like to contribute regarding any area of financial regulation, then please feel free to email me and submit your blog entry. The content should be concerned with financial regulation, and why it matters, but this is broadly defined. The blog is open to all who are professionally concerned with financial regulation, which may range from an Undergraduate Student interested in writing on the subject, to Professors and industry participants.